Gartner predicts that global semiconductor growth will increase by 18.8%

Latest update time：2024-10-29

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Source: Content Comprehensive from Gartner , thank you.

Market research firm Gartner predicts that driven by the demand for artificial intelligence, the global chip market will grow by 18.8% in 2024 to reach US$629.8 billion.

This growth rate is higher than the 16.8% growth rate Gartner predicted a year ago, which itself was lower than the previous forecast of 18.5%. Gartner has lowered its latest growth forecast for 2025 from 15.5% to 13.8%, so the total market will reach $716.7 billion next year.

“The growth was driven by continued growth in AI-related semiconductor demand and a recovery in electronics production, amid continued weakness in the automotive and industrial sectors,” said Rajeev Rajput, senior principal analyst at Gartner, in a statement.

In the short term, the memory market and graphics processing units (GPUs) will drive global semiconductor revenue growth.

The global memory market revenue is expected to grow 20.5% to $196.3 billion in 2025. The continued supply shortage in 2024 will drive NAND prices up 60% in 2024, but prices will fall 3% in 2025. Due to the reduced supply and weak pricing environment in 2025, NAND flash memory revenue is expected to reach $75.5 billion in 2025, an increase of 12% from 2024.

DRAM supply and demand will rebound due to improved supply shortages, unprecedented high-bandwidth memory (HBM) production and demand, and rising prices for DDR5 format DRAM. Overall, total DRAM revenue is expected to grow to $115.6 billion in 2025 from $90.1 billion in 2024.

Total GPU revenue is expected to reach $51 billion by 2025, up 27%. "However, the market is now moving to the return on investment (ROI) phase, where inference revenue needs to grow to a multiple of training investment," said George Brocklehurst, an analyst at Gartner.

However, the hottest product may be high-bandwidth memory (HBM) DRAM, with revenue expected to grow by more than 284% in 2024 and 70% in 2025 to $12.3 billion and $21 billion, respectively.

Analysts re-up their chip market forecasts, but remain cautious

Malcolm Penn, founder and chief analyst at Future Horizons, raised his forecast for global chip market growth in 2024 to 13% to 17%.

In a webinar in September, Payne said he thought the most likely outcome in 2024 was a global market of about $606 billion, or 15% annual growth. That's in line with the 15% to 20% growth most other analysts are predicting, but it's a big difference from what Payne said in May 2024.

In May, the analyst cut his 2024 forecast from 16% to between 3.5% and 8%, with a most likely scenario of 4.9% growth. He said at the time that this was because of unusually low market data for the first quarter of 2024.

During the webinar, Payne said that the “train wreck” in the first quarter of 2024 was immediately followed by an upward revision of the World Semiconductor Trade Statistics Organization (a provider of chip sales data) for the first quarter of 2024, and then a strong second quarter of 2024. While this goes some way to explaining the erratic forecasts, Payne remains skeptical that AI will have as large and immediate an impact as other analysts believe.

Payne predicts that the chip market will grow by 5% to 11% in 2025, with the market size most likely to reach $654 billion, an increase of 8%. The reason for the slower growth in 2025 is that some market areas such as automotive and industrial will continue to be weak, memory prices will be weak, and mature process manufacturing may be oversupplied.

Currently, logic chip sales are performing relatively well, but other areas such as analog and optoelectronics are weak and shrinking. Penn said that the growth in the second quarter of 2024 was driven by rising average selling prices (ASPs) in some industries rather than weak unit demand, and this situation may last at least six months.

Penn asserted that the capacity utilization rates of wafer foundry manufacturers are currently between 70% and 85%, and only Hua Hong has a capacity utilization rate close to 100%, which means that the phenomenon of overcapacity is still serious, and only the cutting-edge capacity occupied by TSMC can be utilized.

Payne added that China’s spending on chip manufacturing equipment has surged, reaching 46.5% of global capital expenditures by 2024. Compared to 2023, China’s spending has increased by 37%, and is seven times what it was in 2012. This could have an adverse impact on chipmakers in Europe and Japan. Since Chinese manufacturing is done in 300mm fabs, this could have a significant impact, forcing many Western fabs that use 200mm wafers to consider upgrading.

Reference Links

https://www.eenewseurope.com/en/ai-demand-is-driving-two-years-of-chip-market-growth-says-gartner/

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